Bills of lading and Bank loans

Srinath Keshavanwww.traderiskconsulting.com

References

• Gard Guidance on Bills of Lading

• www.parliament.uk (Standard Chartered Bank v Oakprime)

• http://www.brookes-and-co.co.uk/News%20and%20Reviews/TT003.htm (Brookes & Co.) - Consequences of Master clausing bills of lading

• http://pntodd.users.netlink.co.uk/cases/cases_a/ardennes.htm (Ardennes case regarding prevalence of contract of carriage over bill of lading)

• Gencon charterparty terms

An international trade transaction

Contract

Intent Counterparties Goods Price INCOTERMS Title Liabilities/Duties Governing law Jurisdiction for dispute resolution

Movement of goods

Packing units Time of deliveryMode of transport

Banking arrangementsPayment conditions (time & mode of payment) Currency

DocumentationInvoice Determination of Quality, QuantityOrigin Transport Insurance

Transaction

An international trade transaction

LC Beneficiary(Seller)

LC Applicant(Buyer)

AdvisingBank

LC Issuing Bank

4

Contract

Shipment

LC application

LC issued

LC advised

Shipment documents

Payment

Functions of a bill of lading

Receipt for the goods loaded

Evidence of the contract of carriage

Document of title

Bill of lading as a receipt for goods loaded

• The function of receipt applies to all bills of lading whether negotiable or not

• The bill of lading will normally be evidence of when goods were received and their status on receipt in terms of marks (to identify the goods), apparent order and condition (Mate’s Receipt, too), quantity and/or weight

• Consequences of inaccuracy in respect of state of goods at time of loading• Exposure to claims• Loss of the right to limit liability• Loss of P&I cover• Loss of the right of indemnity from the charterer• Criminal prosecution of the carrier and/or Master

Antedating of bill of lading Standard Chartered Bank (SCB) v

Oakprime International Ltd, SCB v MD of Oakprime, SCB v Pakistan National Shipping Corp

+ owner’s shipping agent

Discharge of cargo

Master clausing bill of ladingDavid Agmashenebeli case

Discharge of coal in India

Bill of lading as evidence of a contract of carriage

• The bill of lading also acts as evidence of the contract of carriage between the carrier and the shipper. This is a function of bills of lading whether negotiable or not

• The carrier may be the owner, charterer or freight forwarder and is the party who enters into a contract of carriage of goods with the shipper

Deviation from contract of carriageArdennes case

Bill of lading as a document of title

• Title in the context of bills of lading means right to possession of the goods from the carrier. It does not mean right to ownership – the sales contract usually determines this

• If the right to possession of the goods from the carrier is determined by the possession of a document such as a bill of lading, then that document is a document of title

• A received for shipment bill of lading does not evidence shipment of goods by the carrier. It has a limited function as a document of title, and in any event will only so function if it has been issued by or for (with the necessary authority) the carrier

Bill of lading as a document of title

Bill of lading as a document of title

• Closely connected with the function of document of title is negotiability. If the bill of lading is negotiable it can be transferred from an entity with title to an entity without title, for example from a consignee named in a bill of lading to a consignee not named in the bill of lading

• Negotiable bills of lading allow goods to be traded several times during the voyage

• A straight bill of lading is not issued in a negotiable form. It requires the carrier to deliver goods only to the consignee designated on the bill of lading

Soybean meal to China

Thank you!Questions, please?

Srinath Keshavanwww.traderiskconsulting.com